On April 23 of this year, reforms were approved to the Federal Labor Law, Social Security Law, Infonavit Law, Income Tax Law, Value Added Tax Law and the Federal Tax Code, which prohibit the subcontracting of personnel that provide services included in the corporate purpose of the companies that hire them, and that regulates the subcontracting of specialized services, forcing companies that provide the latter services to comply with a series of requirements.

Until before this reform, some companies had their staff, sometimes in their entirety, subcontracted to related party companies known as “insourcing”. This required both the company that received the service and the one that provided it, to have a Transfer Pricing analysis.

Based on this reform, it is important to review how these companies that provide “insourcing” services will be configured (those that will not disappear), and take into account the new structures of national and multinational business groups, since the analysis of the studies Transfer Pricing should reflect the new business reality and the way in which service provision operations would be carried out.

The foregoing would be reflected in the functional analysis of the operation, in which it should be described whether or not the services provided between related parties are specialized services in accordance with the new labor regulations.

Additionally, when changing the nature of the services that these “insourcing” companies could provide, it is important to rethink the economic analysis of said Transfer Pricing study, mainly in the search for comparable companies, so this fiscal year 2021 is required of an exhaustive analysis of the implications of the subcontracting reform in operations carried out with related parties.

*****

At Russell Bedford, we have a team of specialized professionals with whom we can support you in timely compliance with these tax obligations.